Renewable Energy in Today’s Data Center

Ron Vokoun DBIA, LEED AP BD+C, leads the Mission Critical Market for at JE Dunn Construction. Ron was previously Director of Mission Critical for Gray Construction and also served in leadership roles with Qwest Communications and Aerie Networks. You can find him on Twitter at @RonVokoun.

RON VOKOUN
JE Dunn

Much has been said about Greenpeace’s recent “How Clean is Your Cloud?” name-and-shame campaign where the advocacy group graded the top names in the data center world for their use of clean energy. It is well established that data centers are one of the fastest growing users of energy, which makes them an easy target for criticism. Counter to the Greenpeace report, a great deal of progress has been made in this area by the very giants in the data center industry that they are criticizing.

The use of clean energy in data centers is a complex issue and one that is difficult to summarize in a single grade measure. There are many pros and cons to be evaluated when considering renewable energy. The cost of renewable energy, the return on investment, and the heavy reliance on incentives must all be considered. There is also the option of purchasing renewable energy certificates or carbon credits.

Industry leading companies like Google, Apple and others are jumping in with heavy investments and/or commitments to green data center operations and are proving to Greenpeace and investors that green operations are achievable. As you contemplate if renewable energy makes sense (and cents) for your mission critical environment, take a moment and weigh the lessons learned to date by our industry.

The Good, the Bad and the Ugly

There are many positive aspects of renewable energy beyond the obvious elimination of greenhouse gases that are produced by coal-fired power plants. There are clear economic benefits — renewable energy is a means to mitigate your risk against the future rise in power prices. Whether you install your own solar panels or sign a power purchase agreement, you effectively lock in the price of the power produced for 20 years. If a carbon tax or cap and trade policy is implemented, your investment will be money well spent for years to come. On-site renewable energy production can also provide a measure of protection against the brownouts that have become commonplace during the summer months in certain areas of the United States. Solar production is at its best during these peak power use periods.

Unfortunately, there are several negatives to renewable energy that are preventing wider adoption. First and foremost, renewable energy is expensive to implement, and often has a very long return on investment. It is also dependent on incentives to improve the return on investment. Sources of renewable energy are intermittent, which presents a problem for consistent users of power like data centers. This is being addressed through the refinement of power storage devices, but progress is slow going and the economics are not yet appropriate for mass adoption. Also, a great deal of land is required to implement renewable energy in many cases. For example, it typically requires 5-10 acres to produce one megawatt of power from solar depending on the density and efficiency of the panels you install.

Cost and Return on Investment – Solar, Wind and Other Energy Sources

Over the past two years, the price of solar has dropped drastically making it much more affordable. Part of this reduction was caused by the alleged “dumping” of panels on the U.S. market by Chinese manufacturers. And, even with these major price cuts, solar has struggled to reach “grid parity” (Grid parity is defined as the point at which the cost of renewable power production is the same as that of the rest of the grid.)

Wind energy, on the other hand, has steadily improved its price point, achieving grid parity in many areas of the country. Fuel cells are another technology that shows great potential. Bloom Energy, which is a solid oxide fuel cell technology that converts fuel to electricity through an electro-chemical reaction, has received a great deal of attention of late. The attention is for good reason, because their technology appears to be quite efficient. Fuel cells are expensive, but the economics appear to be improving. Also, they hold the advantage over other forms of renewables by not being subject to intermittency. Geothermal, in certain areas, has proven itself over a long period of time and should definitely be considered.

Energy Incentives

Renewable energy receives a great deal of scrutiny over the number and amount of incentives it receives and requires for it to provide a good ROI. What most don’t realize is that fossil fuels also receive at least the same level of incentives. These aren’t transparent, so most don’t realize it’s happening. Research the amount that the fossil fuel industries spend on lobbyists and it becomes evident what’s at stake for their business.

When considering renewable energy, there are multiple levels of incentives available. At the state level, many power companies offer varying incentives for installing renewable energy. These vary by state and have been dropping steadily with the drop in price of solar and other forms of renewables. There are federal incentives as well, but they have not fared well in the recent political environment. For example, the Production Tax Credit (PTC), which provides a 2.2-cent per kilowatt-hour (kWh) benefit for the first ten years of a renewable energy facility’s operation, expired at the end of 2011 and has not yet been renewed. It is important to not focus too heavily on incentives and look at the long-term benefits of renewable energy.

Renewable Energy Certificates and Carbon Offsets

Many companies do not have the opportunity to produce their own renewable energy due to location. In these situations, Renewable Energy Certificates (RECs) or carbon offsets can be purchased to offset your power usage. One REC conveys the green attributes of one megawatt-hour of renewable energy generation to the purchaser. Carbon offsets are more specific in that the purchaser gains the benefit of offsetting one metric ton of carbon dioxide (MtCO2e). Although both techniques are effective, carbon offsets are more wide ranging in their application and value.

Progress and Commitments in Renewables

Despite the drawbacks of renewable energy, several of the leaders in our industry have recognized the value of renewable and taken a leadership role in implementation. Google is the undisputed leader in investments with more than $915 million invested to date, including projects capable of generating 1.8 gigawatts of power. Apple has recently made commitments to power its data center in Maiden, NC, with 100 percent of its energy from renewable sources.

The list of data centers committed to renewable energy definitely doesn’t stop with Google and Apple. Facebook made the news late in 2011 by settling its dispute with Greenpeace by agreeing to add the availability of renewable energy to their data center siting criteria. Microsoft announced recently that it plans to go carbon neutral through the purchase of RECs and carbon offsets and charge a fee to each of their operating groups for each ton of carbon that they produce. QTS (Quality Technology Services) also announced that they plan to install one megawatt of solar panels between their Atlanta and Richmond data centers. Other data center developments being planned that will be powered by renewable energy include: WindData in Pflugerville, TX; Vineyard Data Center Park in Colorado Springs, CO; Niobrara Data Center Energy Park in Weld County, CO; and the Net Zero Energy Data Center Campus in Buckeye, AZ.

Green Power Branding

As with sustainability in general, there is a value to the branding associated with the use of renewable energy. If you are one of the large data center players listed above, you certainly don’t want to make Greenpeace’s “hit” list, but it goes much farther than that. It speaks to the triple-bottom-line concept of financial, social and environmental responsibility. As the cost of power rises and technology improves, the financial aspect will make more sense.

In closing, there are many things that must be evaluated in choosing a path toward renewable energy for your data center. Go into it with your eyes wide open by looking at the costs and benefits to your company. My next column will discuss energy efficiency in the data center, which should be addressed before installing renewable energy as the best watt is the one that is not used.

Related Stories

As part of its new initiative on discussing its energy usage, Google has put together a video that provides an overview of its Power Purchase Agreementsand how renewable energy fits into its data center strategy Read More

What's the best approach to renewable energy in the data center? To get some perspective on the issue, we spoke with John Stanley, a researcher at The 451 Group who specializes in "Eco-Efficient IT" and the intersection between data centers and sustainability. Read More

Greenpeace International this week broadened its focus on the environmental impact of data centers, releasing a report that profiles the energy usage of the facilities powering 10 major Internet services. The group called on the largest players in IT to disclose more information about the energy use in their data centers. Read More

In our Special Report: Data Centers and Renewable Energy, we look at the challenges of implementing renewable energy solutions in data centers, and also highlight early adopters who have implemented on-site renewable solutions. Read More

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6 Comments

Thanks for this post. It is a thorough article and teases out many of the nuances associated with renewable energy, ROI, triple bottom line accounting, industry incentives, and so on. Good point here that Data Centers are relatively new building types. We have just gotten started and it stands to reason that we have a long way to go. We should not allow criticisms from environmental stakeholders to pressure us to throw the "baby out with the bathwater" but rather take these as challenges to be overcome.

Here is a good example of a major technology company with data centers choosing to use their roof space to feature a solar array : http://www.spgsolar.com/2012/04/10/rooftop-solar-at-ebay/
The author is certainly correct that implementing renewable energy requires a full analysis of production, economic return, and incentives available - as does any investment in a business energy strategy. Depending on location, solar can definitely make sense for data centers and other energy intensive businesses to ensure energy certainty for 20+ years and reduce risk associated with volatile energy costs.

Nice article indeed.
IMO, Greenpeace is attacking the data center industry without a sufficiently broad perspective. Yes data centers are significant industrial users of energy. Unless we decide we no longer need electronic data processing, this will always be the case. On the other hand, the data center industry (through Green Grid and others), is demonstrating significant introspection regarding energy usage, energy efficiency, and application of alternative energy sources. The focus on PUE and other efficiency metrics is evidence of that.
Regarding renewable energy sources, it's difficult to make a broad statement toward the data center industry. Data centers are located in lots of different places, all over the globe, and often in settings that are not selected for any optimization of data center operation. Access to renewable energy is not something that every data center operator has the luxury of choosing. In fact, in most cases they probably don't, at least in any impactful way. Generating energy on-site will require PV technology, et. al. to improve the efficiency of the devices that generate the electricity before data centers can take advantage of them for more than just lighting.

Jonathan, Robert, and Bob:
Thank you very much for your comments and insight. I agree with what each of you have said and hope that through further education and commitment, renewable energy can help reduce the impact that data centers have on the environment.